More Signs of a Housing Bottom

Calafia Beach Pundit submits: Data released today provide more support for the theory that we have seen the bottom in housing. The first chart is an index of the stocks of 18 leading home builders. It has reached a 19-month high, and is up 140% from its March '09 low. The second chart is the result of a survey of home builders that covers questions on present sales, sales expectations, and prospective buyer traffic. It is still quite low, but has more than doubled from its January '09 low. The third chart shows a continuing decline in the supply of unsold homes on the market. The pace of the decline looks very much like what occurred in early- to mid-1980s housing market recovery. The fourth chart shows a clear bottoming in the number of existing homes sold (the spike late last year was related to the anticipated end of the home buyers' credit). Add to these signs of resurgent activity the fact that mortgage rates are at or very near all-time lows; that housing prices in 20 major markets have dropped by one-third in real terms since reaching a peak four years ago; and that signs of a general economic recovery are widespread. The resulting picture becomes quite clear: the great housing market bust is over, and a new growth cycle is underway.Complete Story »

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By Calafia Beach Pundit:
More evidence of the housing recovery: according to Case-Shiller, home prices rose over 12% in the year ending July, reaching a post-recession high in both real and nominal terms. However, prices are still 23% below their early 2006 peak in nominal terms, and 32% below their peak in real terms. Despite their recent rise, 30-year fixed mortgage rates are still 25% below their 2006 average, which means that housing is still far more affordable today than it was seven years ago.

If anyone is still wondering why back in June Zero Hedge first presented what the adverse impact on housing affordability as a result of soaring rates, today's NAR release on existing home sales should set all questions to the side.

In case the world needed any additional proof that the latest housing bubble (not our words, Fitch's) was on its last legs, it came earlier today from Credit Suisse' Dan Oppenheim who in his monthly survey of real estate agents observed that October was "another weak month" for traffic, with "pricing power fading as sluggish demand persists." This naturally focuses on the increasingly smaller component of buyers who buy for the sake of owning and living in a home instead of flipping it to another greater fool (preferably from China or Russia, just looking to park their stolen cash abr

By Calafia Beach Pundit:
The chart below compares the Case Shiller index of housing prices in 20 metropolitan markets to the RadarLogic index of prices in 25 metropolitan markets, measured on a price per square foot basis. Both are doing a remarkable job of tracking each other, so it's unlikely that they are missing something important. And according to both, prices have been essentially flat for the past two years, after falling by about one-third from their 2006-07 highs.

Calafia Beach Pundit submits:
The release of the March Case-Shiller home price index, which showed the non-seasonally adjusted number falling to a new post-recession low, is apparently confirming the view among many analysts that housing is now in a double-dip. That may be an irrelevant and premature assessment, however, given that the March number reflects the average of prices in the months of Nov., Dec. and Jan.

The S&P homebuilders ETF (XHB) is down nearly 0.6% since Friday’s market close after rising up by 5.4% over the two weeks ending Friday. The drop in the XHB followed the National Association of Home Builders’ (NAHB) announcement of a fall in the Housing Market Index (HMI) in February 2014, and lower than expected housing starts during January, 2014.

More evidence of the housing recovery: according to Case-Shiller, home prices rose over 12% in the year ending July, reaching a post-recession high in both real and nominal terms. However, prices are still 23% below their early 2006 peak in nominal terms, and 32% below their peak in real terms.

By Calafia Beach Pundit:
The top chart shows the rate on 30-yr fixed conforming and fixed-rate mortgages, and the bottom chart is an index of new mortgage applications. Mortgage rates have been at all-time lows for the past several months, and new applications for mortgages have jumped 30% since last August.